Oral Argument Preview: Can a Board of Education Sell Old School Buildings Subject to a Deed Restriction Forbidding the Use of the Buildings for School Purposes? Board of Education of the City School District of the City of Cincinnati v. Roger T. Conners and Deborah Conners.

On February 7, the Supreme Court of Ohio will hear oral argument in the case of Board of Education of the City School District of the City of Cincinnati v. Roger T. Conners and Deborah Conners, 2011-0673. The appellant’s proposition of law is “the Ohio legislature has not expressed a public policy in favor of community schools over public schools with regard to a public school district’s disposal of real property; to the extent any public policy has been established, it is expressly stated in R.C. 3313.41(G), and does not permit a court of law to unilaterally abridge a public school district’s statutory authority to negotiate arm’s-length contract terms, including deed restrictions in a contract to sell real property to private citizens.”

Appellant Board of Education of the City School Districtof the City of Cincinnati (CPS) sold Roosevelt School, one of several run-down old school buildings it had determined was no longer usable as classroom space, at a public auction to the appellees Roger and Deborah Conners (the Conners) for $30,000. The Conners were private citizens, and the only bidders on that property. The sale price was substantially below the appraised value of the property because the building was sold subject to a deed restriction specifically forbidding the use of the property for school purposes at any time. At the time of the sale of the property, R.C. 3313.41(G)(1) required a public school district to make a first offer of any real property that is suitable for use as classroom space to the governing authorities of community schools. However, CPS determined that the property was not suitable as classroom space and thus did not offer it to any community schools. (The Ohio statute refers to community schools. Most people call them charter schools, which we shall do hereafter in this post.).

Subsequently, the CPS became aware of the Conners’ intention to re-open the building as a charter school. The CPS filed a complaint for declaratory judgment and injunctive relief to enforce the deed restriction. The trial court granted the Conners’ motion for judgment on the pleadings, finding the deed void as against Ohio’s public policies in favor of conveying unused public school buildings to public charter schools. The First Appellate District affirmed the trial court’s decision, saying that facilitating community schools’ access classroom space was clear Ohio public policy, and that the deed restriction that sought to prevent the use of the property for educational purposes was against this public policy.

CPS first argues that there is no public policy in favor of giving charter schools access to all classroom space, because the language of R.C. 3313.41(G) is clear and unambiguous. The pertinent language of R.C. 3313.41(G) only required a preliminary offer of property to charter schools for property that would make suitable classroom space. If not, other provisions of R.C. 3313.41 allowed the sale of the property at public auction or private sale if the property did not sell at auction. The statute did not prohibit deed restrictions. It did not say that all public school district property had to be first offered to charter schools before being auctioned. Thus, ruling that the deed restriction violates public policy in favor of charter schools imposes extra-statutory language not expressed by the legislature.

CPS also argues that voiding a contract because of a violation of public policy should be narrow and rare. The United States Supreme Court has held that a decision to void a contract should only be done if the contract conflicts with laws and other legal precedents, not general considerations of public interest. Ohio courts have generally agreed. The only clear statutory public policy here is the first offer requirement. This sale occurred past the point of the first offer requirement, thus, there is no application of the doctrine here.

The third argument by CPS is that Ohio courts have historically enforced valid deed restrictions in accordance with the principle of freedom to contract. CPS, as a body, is capable of contracting in regard to real and personal property through R.C. 3313.17. CPS claims that this statute is a clear statement by the General Assembly showing CPS’s freedom to contract. Since the deed restriction was clear and unambiguous, and since the Conners agreed to the restriction, the Court should not step in and void the contract.

The final argument from CPS is that the General Assembly, through a number of statutes, has already created Ohio policy regarding charter schools and public schools. The policy so far has not been to show a preference for charter schools or to provide them with unlimited access, resources, and advantages. Instead, the General Assembly provides limited competition within the bounds of strict statutory guidelines.

The Conners argue that the remedy of voiding a contract because it is against public policy is well-established in Ohio and is not judicial activism. Both the U.S. Supreme Court and Ohio courts have held that “the public’s interest in confining the scope of private agreements to which it is not a party will go unrepresented unless the judiciary takes account of those interests when it considers whether to enforce such agreements.”

The public’s interest is heightened here because one of the parties to the contract is a public entity. CPS is a state actor which advances public interests (education) in Ohio. As a result, CPS does not have unlimited contracting power. Rather, it contracts at the pleasure of the state and its policies, and the Court should employ heightened scrutiny when looking at such a contract.

The Conners also argue that a contract term is against public policy when it seeks to hinder results that an Ohio statute seeks to create. The state encourages the use of charter schools to feature educational opportunities. Deed restrictions prohibit this use and injure the state’s ability to further education.

The Conners contend that Ohio public policy favors helping charter schools acquire public school buildings. Various state statutes and agencies advance school choice. Deed restrictions have increased the costs and limited the opportunities of charter schools to flourish. Charter schools are either forced to buy property from a purchaser of public school property at an increased rate, or they are inefficiently forced to transform non-classroom space into space sufficient for schooling.

The final argument by the Conners is that once the deed restriction is stricken, the conveyance of the property should remain otherwise intact. It would be antithetical to let CPS get out of a valid agreement and try to sell the property anew because a portion of the contract is unenforceable. In addition, the contract contained a severability clause, saying that if any portion of the contract is found to be unenforceable, the rest of the contract is still enforceable.

Two amicus briefs have been filed in this case. The Ohio School Boards Association has filed a brief in support of CPS. The Black Alliance for Educational Opportunities, the National Alliance for Public Charter Schools, the Ohio Alliance for Public Charter Schools, the Ohio Coalition for Quality Education, and School Choice Ohio have joined in a brief in support of the Conners.

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Marianna Brown Bettman

Marianna Brown Bettman is Distinguished Teaching Professor and Professor of Practice Emerita at the University of Cincinnati College of Law, where she taught torts, legal ethics, and a seminar on the Supreme Court of Ohio. She is also a former Ohio state court of appeals judge. Professor Bettman is a frequent presenter on Supreme Court of Ohio cases at Continuing Legal and Judicial Education seminars and conferences including the Ohio Judicial Conference. She also provides appellate consulting services to attorneys.